Family-owned companies face unique vulnerabilities. Potential sources of discord among family members loom around every corner. Generational transitions; major investment decisions; appropriation of profits; leadership appointments. After all, why should entrepreneurial families be less quarrelsome than any other group of relatives? The consequences of their disputes, however, can be more serious and far-reaching. Conflict is, perhaps, the greatest destroyer of value in family firms.
For family-owned companies to sustain dynamic progress across generations, they need to manage the inherent conflict between family and business on a consistent basis. Finding an equilibrium that leverages the best aspects of both family and business is difficult, but if done well, offers handsome rewards.
Business and Family Governance Consulting
It is important to articulate a governance framework that separates business from ownership and defines a clear process for families and owners to resolve family and business issues. This could take the form of Family Councils, Owners’ Councils, Advisory Boards, etc. We bring global knowledge and experience to help you craft the appropriate governance frameworks and define the remit of these bodies. Based on a clear assessment of the strategy and the ownership structure, we proactively assist our clients in the competency-based selection of independent directors and advisors to bring these governance mechanisms to life. For many of our family business clients, we also periodically review the effectiveness of these governance bodies.
Founder and Next Generation Transitions
Founder transition is an emotional and challenging issue that faces every family business at some time. Each generational transition is an opportunity to reflect on the future strategy and the ownership and management structure. Preparing for this transition in advance is critical to the continued success of the business. This process needs to be thoughtfully planned rather than managed only as an eventuality. We assist family companies in planning for transition by obtaining an accurate picture of existing family talents and their motivations, benchmarking them against the best available internal and external resources (especially in the critical phase of founder transition), and analyzing their potential.
Succession is one of the biggest inflection points in a family business. Getting it right is critical. Therefore, succession needs to be planned well in advance and the process needs to be executed thoroughly. It is important to work with the key stakeholders to prepare a succession process that encompasses both internal and external candidates, building alignment across generations and ensuring that the role and responsibilities are clearly articulated and understood. In all these decisions it is important that there is a good fit between family values and culture and the individual’s value systems.
For many family firms, recruiting top executives from outside the family represents a major challenge. At the start of such assignments, we assure all stakeholders are aligned about the expectations and profile of the senior executive to be attracted.
Independent of the candidate being a family or non-family member, the integration during the first six months is vital for receiving the expected value and impact. In respect to non-family CXOs it is even more crucial to gain the trust of the family and to adapt to their working style.